BofA CEO says taking $20B loan was a 'mistake'

Published: Monday, March 2, 2009 at 5:08 p.m.

Last Modified: Monday, March 2, 2009 at 5:09 p.m.

NEW YORK (AP) — Bank of America Corp.'s CEO is now calling his request for $20 billion in government money to support the acquisition of Merrill Lynch a "tactical mistake."

Ken Lewis also said he would stay on as CEO until the Charlotte, N.C.-based bank pays back all of its $45 billion in government funding — which could take two or three years.

Lewis made the comments to The Financial Times on Monday, and spokesman Robert Stickler later confirmed the remarks. Stickler noted in an e-mail that Lewis will be 65 years old in about three years.

The news came as Bank of America's shares plunged alongside other bank stocks Monday. Worries about the viability of the financial industry escalated as American International Group Inc. reported a $61.7 billion fourth-quarter loss and got another $30 billion in federal funding, bringing its total government investment to $180 billion.

Lewis told the Financial Times that taking $20 billion from the government in January made Bank of America Corp. appear as weak as Citigroup Inc. He took it because he wanted "a cushion" of capital as his company absorbed the ailing investment bank Merrill Lynch, but he should have requested $10 billion instead, the CEO said in the interview.

Bank of America and Citigroup have each gotten $45 billion in government funding, and both reported losses in the fourth quarter. But Bank of America's $2.39 billion loss was its first quarterly shortfall since the crisis began. Citigroup, on the other hand, has reported five straight quarters of losses adding up to more than $28 billion.

Citigroup also got a large portion of its government investment converted to common stock last week.

Citigroup's stock hit a new all-time low on Monday, trading as low as $1.15 a share before closing down 30 cents, or 20 percent, at $1.20.

Citi and Bank of America are among the 20 banks that the government will "stress test" to decide if they have sufficient capital to survive sharply deteriorating economic conditions. The tests are expected to be completed by the end of April.

In addition to its uncertain financial health, Bank of America has come under scrutiny after Merrill Lynch executives received $3.6 billion in year-end bonuses.

Merrill Lynch, which posted a $15 billion loss in the fourth quarter, was not technically part of Bank of America until January, and was run until then by former CEO John Thain. But the New York attorney general is trying to get both Thain and Lewis to release the names of the executives who received the hefty payouts.

<p>NEW YORK (AP)  Bank of America Corp.'s CEO is now calling his request for $20 billion in government money to support the acquisition of Merrill Lynch a "tactical mistake."</p><p>Ken Lewis also said he would stay on as CEO until the Charlotte, N.C.-based bank pays back all of its $45 billion in government funding  which could take two or three years.</p><p>Lewis made the comments to The Financial Times on Monday, and spokesman Robert Stickler later confirmed the remarks. Stickler noted in an e-mail that Lewis will be 65 years old in about three years.</p><p>The news came as Bank of America's shares plunged alongside other bank stocks Monday. Worries about the viability of the financial industry escalated as American International Group Inc. reported a $61.7 billion fourth-quarter loss and got another $30 billion in federal funding, bringing its total government investment to $180 billion.</p><p>Bank of America shares dropped 32 cents, or 8.1 percent, to $3.63. On Feb. 20, shares hit a 26-year low of $2.53.</p><p>Lewis told the Financial Times that taking $20 billion from the government in January made Bank of America Corp. appear as weak as Citigroup Inc. He took it because he wanted "a cushion" of capital as his company absorbed the ailing investment bank Merrill Lynch, but he should have requested $10 billion instead, the CEO said in the interview.</p><p>Bank of America and Citigroup have each gotten $45 billion in government funding, and both reported losses in the fourth quarter. But Bank of America's $2.39 billion loss was its first quarterly shortfall since the crisis began. Citigroup, on the other hand, has reported five straight quarters of losses adding up to more than $28 billion.</p><p>Citigroup also got a large portion of its government investment converted to common stock last week.</p><p>Citigroup's stock hit a new all-time low on Monday, trading as low as $1.15 a share before closing down 30 cents, or 20 percent, at $1.20.</p><p>Citi and Bank of America are among the 20 banks that the government will "stress test" to decide if they have sufficient capital to survive sharply deteriorating economic conditions. The tests are expected to be completed by the end of April.</p><p>In addition to its uncertain financial health, Bank of America has come under scrutiny after Merrill Lynch executives received $3.6 billion in year-end bonuses.</p><p>Merrill Lynch, which posted a $15 billion loss in the fourth quarter, was not technically part of Bank of America until January, and was run until then by former CEO John Thain. But the New York attorney general is trying to get both Thain and Lewis to release the names of the executives who received the hefty payouts.</p>